Road Warrior

Perspectives From Canada

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My road warrior travels recently took me north of the border to Canada. It is amazing how many Americans know so little about our biggest ally to the North. I laugh when U.S. weather maps stop at the U.S./Canadian border like Canada does not exist. The 10 Percent Rule applies to Canada as compared to the U.S.: the Canadian population is 10% of the U.S. population; the Canadian economy is 10% of the U.S. economy; and farm and ranch numbers and agriculture are about 10% of U.S. agriculture. Ninety percent of the Canadian population lives within 100 miles of the U.S. border.

What is happening in Canada?

  • First, land values are rapidly increasing, similar to the upper Midwest in the U.S. Planting “fence row to fence row” is the theme, and it was surprising that corn had been planted by March 25 in Western Ontario.
  • The federal government is proposing an increase in the retirement age to 67 and cutting other entitlements. It is amazing how Europe and Canada are up front with the tough medicine to cure economic ills that the U.S. will need to address. The government is also eliminating the penny, which costs them $11 million annually.
  • Gasoline prices are ranging from $4.50 to $5/gal., which is placing cash flow and margin crunches on many producers and consumers.

My train trip across the province of Ontario was relaxing and enjoyable. Looking out the window reminded me of a picture postcard of agriculture in the 1960s and 1970s during my youth in upstate New York. The milk supply management program has maintained smaller-sized dairy and poultry farms, very similar to what I was accustomed to on the New York State side of Lake Ontario. One can notice how high grain prices have placed marginal land into production. Surprisingly, around Ottawa, the capital of Canada, the slow food movement was just emerging amongst the horse farms and large suburban homes.

Similar challenges on both sides of the border are margin compression, family business transition and youth attempting to start in agriculture. Young university students have amassed large amounts of university debt, resulting in difficulty purchasing homes in high-priced metro areas. A large Asian population is emerging in Canada, changing the dynamics of the economic and social fabric of the country.

I encourage readers of this column to visit Canada. There are some great farms and excellent managers who have global awareness that would be great farm visits. The beauty and sincere graciousness of the people will make your journey very gratifying.

 

Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at sullylab@vt.edu.

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on Apr 11, 2013

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Dave Kohl is an ag economist specializing in business management and ag finance. He can be reached at sullylab@vt.edu.

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